In our recent Investment Outlook issue, I did a short story on age-based investment tips for 2009 focusing on investors 25 to 35; 35 to 55; and 55 to 75. Although no one is named in the story, I interviewed dozens of financial advisers for my piece. Over the next few weeks, I’ll be posting some tips from these different investment experts.
Today’s advice comes from David Brady, Brady Investment Counsel
We favor small-caps over large-caps. Large-caps are attractive but will be weighted down by Baby Boomers moving investment allocations away from stocks to bonds over the foreseeable future. Small- and mid-caps that can grow sales and earnings per share will see their prices move higher, in spite of this trend.
I recommend a 40% large-cap, 60% medium- and small-cap equity split. Low-cost index funds can be used to fill equity allocations.
On the bond side, we like high-quality AA or better bonds or funds that invest in the same. Muni investors should focus on AA or better General Obligation credits, or funds that invest in same.
PIMCO Total Return is a great taxable bond fund. These guys do an outstanding job of shifting the fund around to find to best value in the bond market. Vanguard Intermediate-Term Tax-Exempt Fund is a good choice on the Muni fund side.